Inside-Out Investigating the Link Between Internal Marketing and Service Quality in Swedish Retail

Bachelor thesis Inside-Out Investigating the link between internal marketing and service quality in Swedish retail. Author: Ebba Svensson Supervisor: Christine Tidåsen Examiner: Miralem Helmefalk Term: VT20 Subject: Degree Project Level: Bachelor Course code: 2FE67E Table of Contents Table of Contents 2 Abstract 4 Keywords 5 Acknowledgments 5 1. Introduction 5 1.1 Background 5 1.2 Problem discussion 8 1.3 Purpose 12 1.4 Research questions 12 1.5 Delimitations 12 2. Literature review and conceptual framework 13 2.1 Internal marketing 13 2.1.1 Definitions 13 2.1.2 Implementing internal marketing 14 2.2 Employee satisfaction and frontline employees 15 2.2.1 Employee satisfaction 16 2.2.2 Employee branding 17 2.2.3 Frontline employees within retail 17 2.3 Service theory and service quality 18 2.3.1 Service theory 18 2.3.1.1 The service marketing triangle 18 2.3.1.2 Service-profit chain 19 2.3.1.3 Gap-model 20 2.3.2 Service quality 22 2.4 Conceptual framework 22 3. Methods 23 3.1 Deductive approach 23 3.2 Qualitative research method 24 3.2.1 Types of data 25 3.3 Research strategy 26 3.3.1 Semi-structured interviews 26 3.3.2 Operationalisation 27 3.3.3 Sampling 28 3.3.4 Implementation of the interviews 30 3.4 Method of data analysis 31 3.5 Quality of research 32 3.5.1 Saturation 32 3.5.2 Trustworthiness 32 2 (65) 3.5.3 Ethical considerations 33 3.5.4 Sustainable considerations 34 4. Empirical findings and analysis 34 4.1 Companies and store managers 34 4.1.1 Mio AB 34 4.1.1.1 Magnus Khrinde, Kalmar 34 4.1.1.2 Åsa Jobratt, Karlskrona 34 4.1.2 Systembolaget AB 35 4.1.2.1 David Boistrup, Växjö 35 4.1.2.2 Johannes Ledel, Halmstad 35 4.1.3 Åhléns AB 35 4.1.3.1 Anja Smittsarve, Visby 36 4.1.3.2 Jenny Carlsson, Karlskrona 36 4.2 The role as store manager 36 4.3 Internal marketing 37 4.3.1 The perception of internal marketing 37 4.3.2 Communication and Information 39 4.3.2.1 Communication 39 4.3.2.2 Information 40 4.3.3 Training and hiring 42 4.4 Employee satisfaction 43 4.4.1 Motivation and feeling of importance 44 4.4.2 Employee branding 45 4.5 Service deliverance 46 4.6 Changes to the conceptual framework 48 5. Conclusion and recommendations 50 5.1 Conclusion 50 5.2 Contribution 52 5.2.1 Theoretical implications 52 5.2.2 Managerial implications 52 5.3 Suggestions for further research 53 References 53 Written sources 53 Oral sources 59 Appendices 60 Interview schedule 60 Appendix A - Original in Swedish 60 Appendix B - English translation 62 3 (65) Abstract This thesis is a qualitative research that provides an understanding of store managers perception of internal marketing on the Swedish retail market. It also describes how the store managers use internal marketing to guide their frontline employees to deliver high quality service. This research aims to highlight the importance of service deliverance in the retail sector. Due to the changes that are taking place within retail where globalization, digitalisation and automation are changing customers' views on trade, it is becoming increasingly important to differentiate themselves. More and more physical stores are finding it difficult to survive and many are forced to shut down. This study therefore wants to highlight the use of internal marketing to be able to deliver high quality service at the encounter between the frontline employees and the customer in physical stores. Therefore, the study will give answers to the following questions: (1) How do store managers on the Swedish retail market perceive internal marketing? (2) How are internal marketing used in physical stores to work with service quality deliverance? To answer these two questions a meticulous examination of previous studies on the concepts internal marketing, employee satisfaction and service quality was made. A conceptual framework for the study was set to classify and analyse the findings of the study. The empirical findings consis data collected through semi-structured interviews with six store managers of three different retail stores on the Swedish market. It was concluded that the store managers perception of internal marketing is unclear but that they all believe it is important. Nevertheless, it can be seen that internal marketing is important and that the store managers work daily with activities to guide the frontline employees to deliver high quality service. However, these activities are not expressed as internal marketing among the companies and store managers. It was also concluded that the service quality delivered by the frontline employees was significant to the success of the stores in the store manager's point of view. 4 (65) Keywords Employee satisfaction, Internal marketing, Retail market, Service quality, Store managers Acknowledgments The author would like to express her gratitude to the supervisor Christine Tidåsen for continuous guidance and assistance in the writing and research process. Furthermore, the store managers interviewed Anja Smittsarve, David Boistrup, Jenny Carlsson, Johannes Ledel, Magnus Khrinde and Åsa Jobratt. Thank you for taking the time to share your personal opinions and experiences and for decisive contributions to the empirical results. I would also like to thank those who opposed my work for, good and rewarding feedback that helped me improve my thesis. 5 (65) 1. Introduction 1.1 Background Globalization, digitalisation and automation are fundamentally changing the retail industry that is currently undergoing a structural transformation (HUI 2019). The prevailing view is that retail will change more in the next ten years than in the previous fifty. Under the year 2017 and 2018 the number of retail stores have decreased by six percent and there are some question marks about why stores are closing down (HUI 2019). These changes is not only affecting the stores but also the customers expectations of the industry and those who work within it. According to Handelsrådet (2010), service is one of the factors that is going to be crucial for a store's survival. This is also addressed by a several researchers that means that we are facing a paradigm shift where customer service will play an increasingly decisive role in the success of a retailer (Gummesson 2017; Grönroos 2015; Zeithaml, Bitner, Gremler & Wilson 2017). Under the undergone shift in the retail industry recent years the online shopping has become increasingly greater part of the business. Large parts of the industry are now in an international competitive environment, which also led to great competition in terms of prices (Svensk handel 2018). As a result of this changes a report made by Svensk handel (2019) predict that the trend in the future may be that many retail companies will scale down their store areas and have fewer stores. The resources that are released through this can instead be used to have more employees in the store and their by utilize one of the physical retails advantages, the store employees who can give attention and advice and build and maintain relationships with the customer. The report also emphasizes that it is important to give customers a reason to go to the store and spend the extra time it takes to get to a physical store instead of going online. This is not only important for maintaining the physical trade, however it can also be seen as the online store and the physical store can complement each other. Moreover, that the retail store is a part of the customer journey where the physical appearance also can work as a communication platform and not only a place where goods are exchanged for money (Ohlsson 2019). Research has shown that the physical store help increase online sales. Therefore, the physical store should be seen as an effective means of competition (Rigby 2011). Today there is a lot of companies that are willing to put in a large sum of resources in just one campaign to attract customers. Instead they are holding back on training and motivation for the employees and does not update the visual environment or have a strategy for how the customer's attention should be guided by the physical environment (Ohlsson 2019). 6 (65) Another more drastic change is currently ongoing that already has and will probably have a continues impact on the society. March 11, 2020, the WHO (World Health Organization) declared that the spread of covid-19 is considered a pandemic (Folkhälsomyndigheten a 2020), and is still going on at the time of writing. This pandemic outbreak has brought many different restrictions and have affected large sections of society and with it also the physical trade. There are now existing restrictions that all people must keep a distance from each other, whether they are indoors or outdoors and avoid places where people potentially gather, for example, retail stores and shopping centers. Retail is one of the sectors that has been affected fastest and hardest (Råman 2020). It is difficult to determine the long-term consequences at present, but the short-term effects are less people in the stores and their by less sales and in some cases, stores are forced to close down and there is a general concern as a result of the pandemic (Råman 2020). Even before this pandemic broke out, there were physical stores that struggled to attract people and they are now facing even greater difficulties. Nevertheless, it is not only the stores themselves that are exposed, but also their employees (Faxén 2020).

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